Impacts of Hospitals' Innovativeness on Information System Outsourcing Decisions

OBJECTIVES The purpose of this study was to identify the effects of hospitals' innovativeness on outsourcing decision-making regarding four information system (IS) functions, namely, software programs, network maintenance, hardware systems, and PC/printer maintenance. METHODS Using the 2011 roster of the Korean Hospital Association, this study selected 311 general hospitals as a study population. After identifying the managers who were in charge of outsourcing, this study administered questionnaires. A total of 103 hospitals responded. RESULTS Of the responding hospitals, 55.34% outsourced at least one IS function, whereas 88.35% outsourced at least one managerial function. IS outsourcing was motivated by the need for outside experts, but other managerial functions were outsourced for cost savings. Innovative and early adopter hospitals were 4.52 and 4.91 times more likely to outsource IS functions related with work processes (i.e., software and network maintenance) than early and late majority hospitals, respectively. IT outsourcing effectiveness significantly influenced the outsourcing decisions regarding four IS functions. Hospitals that had perceived more risks of outsourcing significantly preferred non-outsourcing on their hardware systems, but the risks of outsourcing were not significant for outsourcing decisions regarding the other IS functions. Hospitals' innovativeness also significantly explained the quantity of innovation adoptions. Innovative and early adopter hospitals did more outsourcing than early and late majority hospitals. CONCLUSIONS Hospitals' innovativeness influences decision-making regarding outsourcing. Innovative hospitals are more likely to outsource their work-process-related IS functions. Thus, organizational traits, especially hospitals' innovativeness, should be considered as a key success factor for IS management.